Oil prices rose on Friday (November 7th), but remained on track for a second straight weekly loss after three days of declines on oversupply concerns and slowing US demand.

Brent crude rose 60 cents, or 1%, to $63.98 per barrel at 09:04 GMT. US West Texas Intermediate crude rose 61 cents, or 1%, to $60.04. Both benchmarks are expected to post weekly declines of more than 1.5% as leading global producers increase output.

"The market continues to price in the growing oil surplus against a mixed macro environment," said SEB analyst Ole Hvalbye. An unexpected increase in US inventories of 5.2 million barrels rekindled oversupply concerns this week, said IG Markets analyst Tony Sycamore.

"This is exacerbated by risk aversion, a strengthening dollar, and the ongoing US government shutdown, which continues to cast a shadow over economic activity," he added. US crude oil stocks rose more than expected due to higher imports and reduced refining activity, while gasoline and distillate inventories declined, the Energy Information Administration (EIA) said on Wednesday.

Concerns over the impact of the longest government shutdown in US history also weighed on oil prices. The Trump administration has ordered flight reductions at major airports due to a shortage of air traffic controllers, while private sector reports pointed to a weaker US labor market in October.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, decided on Sunday to slightly increase production in December. However, the group also postponed further increases for the first quarter of next year, citing concerns about oversupply. The well-supplied market prompted Saudi Arabia, the world's largest oil exporter, to announce a sharp reduction in its crude prices for Asian buyers in December.

Meanwhile, European and US sanctions against Russia and Iran are disrupting supplies to the world's largest importers, China and India, providing little support for global markets. Customs data showed that China's crude oil imports in October rose 2.3% compared to September and 8.2% year-on-year to 48.36 million tonnes, amid high refinery utilization rates in the world's largest oil importing country.

Swiss commodity trader Gunvor said on Thursday that it had withdrawn a proposal to purchase foreign assets of Russian energy company Lukoil, after the US Treasury Department called it a "puppet" of Russia and signaled Washington's opposition to the deal.

"Gunvor's cancellation of the Lukoil asset purchase indicates that the US is maintaining its maximum pressure campaign against Russia, and the potential for strict sanctions enforcement against Rosneft and Lukoil," said Vandana Hari of oil market analysis provider Vanda Insights. (alg)

Source: Reuters